China-Canada Trade Deal Under Opposition Fire

OTTAWA - A New Democrat government would do everything in its power to extricate Canada from a controversial and imminent investment treaty with China if it turns out the agreement isn't in the best interests of Canadians, says leader Tom Mulcair.

Critics say the Foreign Investment Promotion and Protection Agreement would turn Canada into little more than a "resource colony" and is poised to be ratified despite almost no parliamentary debate.

Mulcair, speaking after question period Tuesday, said an NDP government would find a way to get out from under the deal after the next federal election in 2015 if closer inspection revealed it wasn't in Canada's best interests.

"You can sign into an agreement and then you can remove yourself from the agreement. That’s what successive governments can do," Mulcair said.

"We’re not going to be bound for the next 30 years by an agreement that hasn’t even been studied, that would make our court system take the interests of foreign investors and foreign companies pass above the interests of Canadians, the interests of our environment, the interests of our rights."

Bolstered by more than 60,000 signatures on petitions and a precision-targeted letter-writing campaign led by activists, the NDP, Liberals and Green party Leader Elizabeth May began a last-minute push Tuesday for a fuller debate on the agreement.

"China is just as important as the United States and we should really be treating this treaty with just the same level of public scrutiny and debate as NAFTA," said Matthew Carroll, campaigns director for Leadnow.ca, an advocacy group that organized the petition and has flooded MPs with emails and letters.

Canada and China signed the agreement at the beginning of September, and the government tabled it in the House of Commons near the end of that month. Under new rules set by the Conservatives, the agreement must be before Parliament for 21 sitting days before it can be ratified.

That time runs out on Thursday. After that, the cabinet needs to sign off on it through an order-in-council. It's not an automatic process, but the Conservatives have given every indication that ratification is imminent.

The agreement comes into force when both countries have ratified it.

"With this agreement, our government is bringing to Canadian investors the protection and predictability to invest with confidence in China, the world's second largest economy," Rudy Husny, a spokesman for International Trade Minister Ed Fast, said in a statement when asked if the government would be willing to hold off on ratification to allow for more debate.

The agreement has been 18 years in the making and is a replica of many other foreign investment protection agreements Canada has with its trading partners, he said.

The opposition has had ample opportunity to examine the China deal, but chose to use its four opposition days in Parliament on other subjects, he added. Plus, government officials have briefed MPs on the deal, he said.

"The NDP and the Liberals are simply misleading Canadians."

Mulcair, however, insisted that it's up to the government to decide whether the treaty is held up for proper scrutiny.

"They're trying to shove it down Canadians' throat without proper analysis," he said. "They're the government. They control the agenda in Parliament. If they're serious, if they're sincere, they’ll provide Canadians time to study this deal and find out what’s in it."

Critics say the deal should have gone before parliamentary committees to be examined by experts for its implications as well as for flaws and weaknesses.

"We have a government that is refusing normal, democratic process," said NDP industry critic Peter Julian.

May argues that the deal would give Chinese corporations — and the government that owns them — new powers to influence Canadian policy, not just in terms of investment and industrial development, but also in the realms of environment and health.

And since Canada is clearly the junior partner in the trading relationship, Canadian governments at all levels will have little choice but to cater to the whims of a China desperate for natural resources, she said.

"We become the resource colony in that context," said May.

As of the end of 2011, Chinese direct investment in Canada totalled $10.9 billion, while Canadian investment in China was $4.5 billion.

Canadian business has long complained that the investment climate in China is too uncertain to warrant major increases in investment and has repeatedly urged Ottawa to sign a deal to ensure Canadian interests are treated just like other investors in China.

But the investment agreement is going through the procedural hoops in Ottawa at a sensitive time in the Canada-China business relationship. The government is in the midst of deciding whether to approve the proposed $15.1-billion takeover of Calgary-based Nexen Inc., by the China National Offshore Oil Corp.

Industry Canada has until Nov. 11 to say whether it believes the takeover is in the country's best interests — a deadline that could be extended if both Ottawa and CNOOC agree.

The CNOOC deal and the foreign investment pact are separate processes, but the federal government faces similar criticisms in its handling of both: that they have not been subject to public scrutiny and that Ottawa risks giving up too much power to the Chinese government.

Indeed, Leadnow.ca addresses both processes in the same breath: "Stop the Canada-China FIPA investment deal and Nexen takeover," the group's petition urges.

"These agreements would pave the way for a massive natural-resource buyout and allow foreign corporations to sue the Canadian government in secret tribunals."

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What You Should Know About China Deal

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Here are five things to know about Canada's investment treaty with China which is expected to be ratified next week:
With files from CBC

This FIPA is different from other FIPAs due to the sheer amount of investment China already has in Canada, said Gus Van Harten, an international investment law expert and associate professor at the Osgoode Hall Law School at York University, in an interview with CBC Radio's The House.
Van Harten explained, the FIPAs Canada has in force are typically with countries who don't own major assets in Canada.
However, under this treaty, Van Harten said Canadian taxpayers will assume "more of the risks and more of the constraints" than their Chinese counterparts to the degree that Chinese investments in Canada outpace Canadian investments the other way.

According to Van Harten, the deal doesn't deliver on market access and investor protection.
"We come out on the losing side on both," said Van Harten. "We should insist on reciprocity. The treaty does not allow for market access except under the exisiting legal framework of each country."
The problem with that, Van Harten said, is Canada's legal framework is "more open and less opaque" than China's existing legal framework which will benefit China more than it will benefit Canada.

Under this treaty, the investor-state mechanism is such that China could sue for decisions made by any level of government in Canada, if Chinese companies thought they were not being treated the same as Canadian ones.
In other words, this deal could undermine the provinces "bargaining power," said Van Harten because "this very powerful arbitration process operates outside of the Canadian legal system and Canadian courts."
Arbitration would happen behind closed doors, said Van Harten and if the arbitrators found Canada at fault, Canadian taxpayers could be left footing the bill. Several countries have already faced stiff punishment under such treaties.
This, according to Van Harten, also calls into question whether the treaty is unconstitutional or not.

The Opposition New Democrats, Liberals and Greens are all calling on the federal government to study and debate the agreement instead of ratifying it and locking it in for the next 31 years without public consultation – as they can do.
In an interview with CBC Radio's The House on Saturday, NDP MP Don Davies, who serves as the international trade critic, told host Evan Solomon that if the federal government ratifies the agreement as it is now, it will have "frozen in time a very lopsided deal."
Davies said they have "received 60,000 emails in the last two weeks from Canadians who are concerned about this deal."

The federal government insists "this agreement includes reciprocal obligations" and is good for Canada, said the Conservative MP who tabled the FIPA with China.
Also in an interview airing on CBC Radio's The House, Deepak Obhrai, the Parliamentary Secretary to the Minister of Foreign Affairs, said this FIPA with China "levels the playing field" between the two countries. Obhrai told Solomon, this agreement "give assurances to Canadian businesses that their investment in China is protected and they can do business in China because this is a deal that is open and treats our companies in each other's country on equal terms."
The question we should all be asking ourselves Van Harten said, is "has Canada conceded something now that we were not prepared to concede under previous governments?"
And according to Van Harten, the answer is "it's quite possible."